MCWD insists: Prime Water wants complete control

CEBU, Philippines — The Metropolitan Cebu Water District (MCWD) belied Prime Water Infrastructure Corporation’s claim that it only sought a joint venture agreement and not privatization of the water district.

“While this may be true for their partnerships with other entities or agencies, the proposal they presented to MCWD involves a complete transfer of management, operation, billing, and collection of water services, which are the core functions of the water district,” MCWD spokesperson Minerva Gerodias said in a statement sent to The Freeman.

During the presentation to the members of MCWD Board, the representative of Prime Water specified that the water district would be left with only five functions: strategic planning, business policy setting, asset management supervision, tariff setting, performance review and monitoring, and customer relations.

The presentation was made a day after the alleged meeting that Mayor Michael Rama hosted in his residence on February 16, 2023. According to Gerodias, the BOD expressed concerns about the legality of the proposal because joint ventures typically do not involve the transfer of management or day-to-day operations and maintenance of the water district.

On the question of job security for employees, the unnamed representative of Prime water allegedly said that it is not mandatory for them to be absorbed. Instead the representative discussed about retirement packages and possible transfer of the majority of employees from government service to private employment.

After hearing the proposals, the BOD agreed that it is not feasible as they believe “it involves the complete transfer of operations to the joint venture, which would make the future of MCWD uncertain.”

On February 22, 2023, the BOD and management of MCWD wrote to Prime Water through its business development head, Angelo Alain Flores, to formally decline the offer for a joint venture. Prime Water was also supposed to conduct due diligence and data gathering for a feasibility study but MCWD denied the request.

The water district, however, said that it remains “open to explore other potential opportunities for collaboration that are more aligned with their vision and strategic directions.”

MCWD noted a Commission on Audit (COA) report that raised concerns about several joint venture agreements entered into by various local water districts with Prime Water.

State auditors pointed out a significant loss of income for the San Jose del Monte City Water District (SJDMC WD) after entering into a joint venture with Prime Water in 2018.

In 2017, the water district reported an income of P126.477 million. However, by the end of 2018, or seven months into the joint venture agreement, the district's income dropped by 58 percent to only P53.6 million.

In 2019, it further decreased to only P2.265 million, representing a 98 percent decrease compared to its 2017 income, while Prime Water was earning P180 million annually.

In the case of Marilao Water District in Bulacan, the COA's 2019 report also highlighted how Prime Water incurred P50.55 million in water losses in its first year of operations in the district.

The report also revealed loopholes in the joint venture agreement that would lead to higher costs for customers and hinder government scrutiny. Additionally, Primewater failed to remit collections and pay franchise tax.

In 2021, the COA also raised questions about 38 joint ventures signed by different local water districts with Prime Water, ranging from Aparri, Cagayan in the north to Zamboanga City in Mindanao.

Government auditors reported that these deals did not comply with the guidelines and procedures set by the National Economic and Development Authority (NEDA) for joint venture agreements.

This year, NEDA has introduced updated JV guidelines that implement stricter rules and regulations to limit the complete takeover of the operations and management of water districts. —  Caecent No-ot Magsumbol (FREEMAN)